Regional Differences in Municipalities’ Flood Policies: Under-Insurance and Community Resilience in Pennsylvania

Elaine Langone Center, Terrace Room

In the US, many flood mitigation actions and decisions are made at the municipal level, though subject to Federal and State-level rules, requirements, regulations, and incentive programs. The National Flood Insurance Program (NFIP), a federal program, is designed to compensate policy-holders for damages, but also serves to encourage property-owners to either move from flood-prone areas or modify structures to be less susceptible to damage – and therefore acts powerfully at the municipal level. Municipalities must participate in NFIP for residents to be eligible, but individuals and companies must choose whether to purchase policies. Pennsylvania has some 2,500 municipal entities, which vary in their susceptibility to flood damage; in their personnel, financial resources, and institutional capacity to conduct flood mitigation; and, not least, in the extent to which they make use of NFIP. The objective of this research was to identify areas of Pennsylvania that make greater, or less, use of NFIP, and identify some factors that may help explain the variations. Two kinds of data were evaluated for 20 selected counties: number of NFIP flood-damage claims in the period 1978-2015; and number of NFIP policy-holders as of 2016. A high ratio of claims to policies (C/P) indicates “under-insured” regions compared to other areas. This impacts community resilience because fewer property-owners receive financial compensation in event of a flood; businesses may fail and residents may move away, and communities may never recover. Findings show C/P ratios ranging from 3.9 for Wyoming County to 0.26 for Philadelphia County. Factors that appear to help explain the variation include a) income, in particular the number of households with relatively high income (>$250,000/year), which appear to purchase more insurance policies; b) density of population, which is believed to reflect increased institutional capacity of municipalities to implement advanced regulations and programs; and c) municipalities’ choices about flood mitigation activities, such as public outreach about importance of insurance. Federal, state, and local agencies may target regions with high C/P ratios to increase their use of NFIP and other flood-mitigation programs.